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Posted October 29, 2025 at 12:58 pm
Forecast contracts posted another year-to-date (YTD) high in trading volumes of 3.36 million yesterday as enthusiasm regarding the NYC mayoral election and gubernatorial races in New Jersey and Virginia drove an uptick in transactions. But it wasn’t just politics that bolstered the participation, with open positions in October Fed Funds, which will be reconciled this afternoon, climbing up to 936,000. Meanwhile, today’s volumes are already at 2 million, and tomorrow’s commentary may feature the third day in a row of YTD highs. Below I offer some opinions tied to data points to be released tomorrow.
The Weekly Economic Index has rarely dropped below the 1.4%, 1.6% 1.8% levels or rose above 2.8% and 3% in the past twelve months. And although it has been trending lower lately, a result of the government shutdown weighing on conditions, I believe tomorrow’s print is poised to come in range-bound and won’t surprise much. Against this backdrop I find the risk-reward profiles of the “Yeses” at 1.4%, 1.6% and 1.8% attractive, as well as the “Nos” at 2.8% and 3%. The thresholds are ranging from $0.88 to $0.97 in cost.
The last time the EU’s GDP print exceeded 0.4% was in 2022’s second quarter and I don’t envision a climb above that in tomorrow’s report. The median estimate is at 0.1% and recent economic signals have pointed to improving, but at the same time, modest growth that doesn’t support a 0.5% increase. Meanwhile, the indicator has a subdued deviation rate, meaning that it tends to arrive near projections. For the reasons mentioned, I find the “risk-reward profiles of the “Nos” at 0.4%, 0.65% and 0.9% attractive, and they’re ranging from $0.77 to $0.95 in price.
Improving conditions in the EU and a subdued chance that tomorrow’s number or the figure from the fourth quarter would come in below 0 signal an attractive entry point for the “No” at $0.87 in my opinion. For “Team No” to lose here, GDP stats for both prints, reflecting 3rd and 4th quarter performances, must be negative, and the path for that is particularly narrow.
The EU’s unemployment level is expected to remain unchanged at 6.3% and there’s a very low chance in my view that tomorrow’s number will breach the 6.1% statistic to the downside, which would be the lowest result on record. Recent economic data point to labor market softening, not strengthening, and this indicator has a subdued deviation rate. For those reasons, I find the risk-reward profiles of the “Yeses” at 5.6% and 5.8% attractive; they’re going for $0.97 each.
A 98% chance exists that the European Central Bank will hold rates steady tomorrow as the committee awaits more growth, employment and inflation reports to gauge the next appropriate steps for monetary policy.
Source for images: ForecastEx
Note: Prices are highest bids as of the morning of Oct. 29, 2025. Red circles around the thresholds were inserted by J. Torres to highlight his preferred “Yes” and “No” answers throughout different levels.
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This material is from IBKR Macroeconomics, an affiliate of Interactive Brokers LLC, and is being posted with its permission. The views expressed in this material are solely those of the author and/or IBKR Macroeconomics and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
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